eBay rejected GameStop’s unsolicited $55.5 billion takeover offer on May 12 and said the proposal was “neither credible nor attractive.” [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11]
In a letter to GameStop chief executive Ryan Cohen, eBay chair Paul Pressler said the board, with help from independent advisers, had reviewed the bid and decided to reject it. He said the company weighed uncertainty over GameStop’s financing plan, operational risks, leadership structure and governance, as well as the impact on eBay’s long-term growth and profitability. [9, 1, 2, 3, 4, 5, 7, 8, 10, 11]
The offer, made in early May, was structured as a half-cash, half-stock proposal at $125 per share. Reports said GameStop also cited up to $20 billion in debt financing and about $9 billion to $9.4 billion in cash, but analysts doubted the deal would close because of financing concerns. [2, 3, 12, 4, 5, 6, 7, 8, 9, 10, 11]
Cohen said he was ready to take the proposal directly to eBay shareholders if the board turned it down. He also said, “We are offering half cash, half stock, and we have the ability to issue stock in order to get the deal done,” while claiming he was best placed to run eBay. [1, 3, 4, 5, 6, 7, 9, 10, 11]
The reports described GameStop as much smaller than eBay, with GameStop’s market value put at about $10 billion to $12 billion and eBay’s at about $46 billion to $48 billion. Several reports also said eBay has been pursuing a turnaround and maintains that its current strategy is working. [1, 3, 4, 5, 8, 9, 10, 11]
GameStop made the unsolicited approach on May 3, and eBay’s rejection letter followed on May 12. Cohen said he could go directly to shareholders if the board held firm. [2, 3, 12, 4, 5, 6, 7, 8, 9, 10, 11]
